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US Labor Market Trends

This report will be updated as needed.

Employment and Unemployment

The US unemployment rate was 5.2 percent in March 1997, as the number of new jobs increased by 175,000 in March, versus 293,000 in March. Of the 340 US metropolitan areas, 214 had unemployment rates below five percent in the fourth quarter of 1996, 133 had unemployment rates below four percent; and 44 metro areas had unemployment rates of less than three percent.

About 15 percent of those who were unemployed in March were unemployed for six months or more. The US unemployment rate was last below five percent in March 1973.

Average hourly wages in private industry were about $12 per hour, $480 per week, or $1920 per month. Real hourly wages in private industry peaked at $13.78 per hour in July 1973, and were $12 per hour in 1996 terms in both 1996 and 1965.

California's Industrial Welfare Commission voted 3-2 in April 1997 to switch from requiring overtime pay after eight hours in any day to overtime only after 40 hours in one week. State officials estimate that the rule change would apply to half of California's 13 million workers.

The California overtime law dates to 1918, when the state ordered that fruit and vegetable canning companies pay time and a half to women and children for any time worked beyond eight hours in a single day.

Labor Supply

The US labor supply, which usually expands by about 1 percent per year, has been expanding about twice as fast, due to immigration, welfare recipients moving more quickly to work, more older men working, and an increase in the percentage of working-age women seeking jobs.

A record 67.2 percent of the US adult population was in the labor force either employed or looking for work. There were 136 million Americans in the labor force in January 1997--127.6 million employed persons and 7.3 million unemployed. Some 121 million US workers were payroll workers, meaning that they had an employer who issued them paychecks.

Some seven million US workers held two or more jobs in 1995, for a total of 15 million jobs, usually by holding one primary and one secondary job that added up to 48 hours of work in a typical week; the number of multiple job holders has been growing. Only one-third of American adults work a nine-to-five, Monday-through-Friday work week.

The most important change in the labor forces of all industrial countries over the past 50 years is the increased number of women working for wages. In 1940, about 28 percent of US women 16 and older were in the labor force. During World War II, a peak 36 percent of women earned wages in 1944.

Women's labor force participation fell after the war, but reached 1944 levels in 1956 and continued rising until 1978, when 50 percent of women were in the labor force. In 1990, about 58 percent of women 16 and older worked for wages.

Male labor force participation also peaked in 1994 at 87 percent of men 16 and older, then fell, and never again reached the 1944 peak. In 1990, about 78 percent of men 16 and older were in the labor force.

There is often a great deal of competition for jobs at the bottom of the labor market, especially if they offer benefits, security and promotion opportunities. In New York, over 17,000 people applied for 320 jobs at a Manhattan hotel, three times more than expected. Most of the jobs paid $9 to $10 per hour, were full-time and offered benefits such as health insurance. Many of those applying were currently working part-time or seasonally and saw hotel jobs as a step up the job ladder.

The number of jobs available in US hotels and lodging places rose from about 900,000 in 1975 to 1.7 million in 1995.

The number of hospital beds in the US was about 1 million in 1983, when there were about 600,000 registered nurses. The number of RNs rose to almost 800,000 in 1993, but the number of hospital beds fell to 900,000 and RNs increasingly complain that, to save money, hospitals are substituting less-skilled workers.

In February 1997, the Clinton Administration announced plans to reduce the number of doctors by paying New York teaching hospitals $400 million over the next six years not to train doctors. Medicare currently spends $6.5 billion to train new doctors and, under the plan, New York hospitals would reduce their number of residents from 8,000 to 2,000.

The number of residents in US hospitals, 25,000, is larger than the number of graduates from US medical schools, 17,000; the difference is filled by graduates of foreign medical schools, both US citizens and foreigners. It costs $1.5 million to train someone from the start of medical school to the completion of a five-year residency.

There are 684,000 doctors nationwide and estimates of the oversupply of especially specialists range from 20 to 30 percent.

Day Labor Markets/Temps

In March 1997, the Malibu City Council banned day laborers from soliciting employment from motorists. A city law already prohibits employers from pulling over in their vehicles and hiring workers and the new ordinance establishes fines for workers who approach cars to seek jobs.

The amended law requires commercial property owners to set aside a space for work solicitation in their parking lots if they wish to regulate it on their property.

Malibu set up a city-sanctioned labor exchange in 1994, but workers continue to solicit jobs on street corners.

One of the most rapidly growing parts of the US economy is the temporary staffing/employee leasing business, which had placements in 1995 worth $39 billion. In 1995, 2.2 million temps were employed on an average day, double the 1990 level. One of the fastest-growing segments of the temp industry are professional and technology temps such as computer programmers. Billings for such workers were $5 billion in 1995.

Temps and part-time workers are considered contingent employees--the need for them is contingent on an employer wanting extra hands. The National Association of Part-Time and Temporary Employees counts as contingents those workers employed full time by temporary agencies, as well as permanent part-time workers, some 30 million workers, or 24 percent of the US labor force. According to the US Department of Labor, between 2.7 and 6 million persons hold jobs that are not expected to last one year.

Los Angeles in 1997 debated a living-wage ordinance that would require businesses with contracts worth $25,000 or more and lasting for at least three months to pay their workers at least $7.25 an hour with health care benefits, or $8.50 without benefits. An estimated 5,000 workers might obtain an extra $3.6 million a year in wages, although some jobs might be eliminated.

Ten high-tech companies, including AT&T, DuPont, Johnson & Johnson, have formed the Talent Alliance, a private job-matching service for laid off workers, and to offer training in skills needed by member companies--http://www.talentalliance.org

Unions

The AFL-CIO announced that its affiliated unions' membership totaled 12.9 million in 1996, up 12,000 from 1995. The percentage of US union members who are women increased to 39 percent in 1996 from 22 percent in 1972.

The AFL-CIO during its mid-February meeting in Los Angeles opposed the extension of NAFTA to other countries unless the trade agreements included stronger labor and environmental protections. Shifting the AFL-CIO's annual meeting from Miami to Los Angeles was considered significant for Hispanics and immigrants. Miguel Contreras, secretary-treasurer of the Los Angeles County Federation of Labor, and his wife, Maria Elena Durazo, president of the local Hotel Employees and Restaurant Employees International Union Local 11, are both ex-farm workers from the San Joaquin Valley who first got involved in union activities through the UFW. The Los Angeles County Federation of Labor represents 325 unions with 700,000 members in Los Angeles County.

Under the motto, "Organizing for Change, Changing to Organize," the AFL-CIO pledged to devote 30 percent of its budget to organizing and urged its international unions to do the same. According to by University of Pittsburgh business professor Marick F. Masters, the annual revenues of US unions are $5 billion and, if one-third of these revenues are devoted to organizing, organizing budgets would jump from $200 million to $1.65 billion.

DOL reported on January 31, 1997 that there were 16.2 million union members in 1996, or that 14.5 percent of the 112 employed wage and salary workers were union members. About 18.2 million workers, or 16.2 percent of wage and salary workers, were represented by unions, meaning that they worked under collective bargaining agreements.

About 13.2 million union members were white in 1996 (13.1 million in 1995), 2.4 million were Black (2.5 million in 1995), and 1.4 million were Hispanic (1.4 million in 1995). Full-time union members had median weekly earnings of $615 in 1996, compared with $462 for non-union workers.

The occupation with the highest percentage of union members was protective services--850,000 of 2.2 million police and security guards, or 40 percent, were union members. About five percent of those with farming, forestry or fishing occupations--92,000 of 1.9 million--were union members. Full-time union members with farming, forestry, or fishing occupations had median weekly earnings of $439 in 1996, a wage premium of 34 percent over the $288 of non-union workers.

Workers employed by the industry government were most likely to be union members--38 percent, or 6.9 million of 18.2 million government employees were union members. Those employed in the agricultural industry were least likely to be union members--only two percent, or 32,000 of 1.7 million. Full-time union members in the agricultural industry had median weekly earnings of $306 in 1996, about the same median weekly earnings of non-union workers, $305.

In New York, the 125,000 member District Council 37 of the American Federation of State, County and Municipal Employees union said it would try to organize the city's 35,000 welfare recipients who are being required to work for their benefits. In New York City, welfare recipients are sweeping streets, cleaning parks and working as hospital aides receiving, in some cases, $68.50 in cash and $60 in food stamps every two weeks for their 26 hours of work a week.

Many US unions that were in the forefront of the fight in favor of illegal immigration in the early 1980s now oppose sanctions and improved employee verification systems to prevent unauthorized workers from finding US jobs.

According to many labor organizers, improved employee verification systems will be another burden on good employers, but will not prevent "bad" employers from hiring unauthorized workers. Instead, echoing a prediction of economist Michael Piore, they said that improved employee verification systems will simply drive further underground garment and other work places that employ unauthorized workers, worsening already bad conditions for such workers.

Stepped-up enforcement can accelerate the exit from the US of low wage jobs that are often filled by immigrants.

Enforcement/Sweatshops

The National Labor Relations Board was set to issue a complaint against Los Angeles-based apparel maker Guess for firing pro-union workers among its 600 directly-hired production and warehouse workers, but drew back when Guess rehired 20 workers with back pay. Guess President Paul Marciano reportedly threatened to fire anyone who signed a union card and to move the company's production abroad if the union campaign succeeded.

Some 3,000 to 5,000 garment sewers and cutters are employed in 60 to 70 contracting shops used by Guess in Southern California. About 1,000 workers lost their jobs when Guess stopped sending work to 20 contractors that the Department of Labor found were violating minimum-wage and overtime laws; Guess was also put on probation to remain on Labor's Trendsetter List, a list of apparel manufacturers and retailers pledged to avoid doing business with sweatshops.

Several workers interviewed said that their goals included sending $200 per month to families in Mexico and Guatemala on hourly wages of $5 to $6, or $800 to $960 per month. Guess provides health insurance, but family coverage requires $200 a month in worker-paid premiums, $5 co-payments for doctors' visits and 20 percent of any hospitalization charges. Guess earned about $43 million in profit on $487 million in sales in 1995.

On January 13, 1997, Guess announced that it was moving most of its clothes production from a collection of downtown warehouses in Los Angeles to Mexico. As recently as 1993, over 95 percent of Guess garments were produced in the US.

The union Unite--the Union of Needletrades, Industrial and Textile Employees-- says that the cost of fabric and labor is less than $5 for a typical $48 retail price of jeans. Guess says that it can save $1.50 to $2 per pair if it has them sewn in Mexico. The total costs of labor--wages, payroll taxes, and fringe benefits--are about $1.10 per hour in Mexico, and $7.50 in Los Angeles.

State data indicate that the number of apparel jobs in Los Angeles has increased steadily from 90,000 in November 1993 to about 115,000 in November 1996, and to 160,000 statewide. But some observers believe that state data are overestimates; they say that 50,000 apparel jobs have left the Los Angeles area since mid-1995, based on indicators such as the number of sewing needles sold.

Unite, Asian Law Caucus and Sweatshop Watch sued California's labor commissioner in February 1997 for issuing a memo that exempts from state registration retailers that manufacture clothing for sale in their own stores.

The Los Angeles Times reported on December 24, 1996 that publicity over sweatshops did not seem to be reducing retail apparel sales in 1996. One US survey found that 83 percent of US adults would pay an additional $1 on a $20 item if they knew the garment was not made in a sweatshop.

In New York City, it was reported that Asians often own sweatshops that employ Asian and Hispanic immigrants. Sweatshops owe their existence to the retailers who want to keep inventories low, but quickly want more fast selling garments, and to a supply of immigrant sewers. Koreans reportedly own 40 percent of the 4,000 sewing shops in New York City and, unlike Chinese-owned shops, the Koreans usually hire Hispanic immigrant workers.

There are 22,000 sewing shops in the US; most sew garments for 1,000 US manufacturers with clothing labels. Labor typically accounts for one to three percent of the retail price of a garment sold in the US.

Several groups monitor labor conditions abroad. On December 15, 1995, garment maker GAP agreed to permit independent monitors to inspect sewing shops overseas where GAP clothes are assembled. The GAP "code of conduct" agreement was reached after retailers threatened to boycott GAP clothes in the US because one of its shops in El Salvador, Mandarin International, fired over 100 pro-union workers.

The New York Times reported on December 25, 1996 that US and Canadian children have begun crusades against Disney and Guess for using child labor to produce their products. Labor advocate Charles Kernaghan charges that Disney contractors pay Haitian workers six cents each for sewing Pocahontas or Hunchback garments, which the company sells for $19.99. Disney responds that it pays the Haitian workers about 50 cents an hour, almost double the minimum wage of 28 cents.

On April 9, 1997, a presidential task force announced that it had reached agreement on a code of conduct for US companies that have apparel manufactured for them abroad. Under the code of conduct, US companies would limit work weeks to 60 hours--a standard 48 hours and a maximum 12 hours overtime--and pay at least the local minimum wage; US human rights groups argued that, in some countries, the minimum wage is too low to meet basic worker needs. In most countries, workers will have to be at least 15 to sew garments for the US market, with some exceptions for 14-year olds.

An independent monitoring group--most likely the international accounting firms--would ensure that the code of conduct is followed, and US companies that abide by the agreement would be permitted to attach a label to their garments indicating that the clothes were produced in accord with the code of conduct.

The 128 members of the World Trade Organization agreed to uphold "internationally recognized core labor standards," including the right to form unions and a prohibition on child labor.

Employment and Training

The federal government operates 163 job training programs administered by 15 separate agencies.

Congress in 1997 is expected to change the US job training system by giving states more jurisdiction and flexibility over job-training, encouraging employers to do more training for their production workers (in 1993, Clinton discussed a 1.5 percent payroll training tax), better evaluating the outcomes of participation in training programs.

In 1993, an evaluation of the California's welfare-to-work program, GAIN, or Greater Avenues for Independence found that GAIN participants earned 15 to 18 percent more than nonparticipants, but earnings were only $2,468 in the first year of GAIN participation and two-thirds of GAIN participants were not employed at the beginning of their second year of participation.

US Employer Responses

In the late 1980s, with the economy booming and most forecasts calling for slower labor force growth in the 1990s, there was talk of labor shortages that would push up wages and encourage US employers to reach farther back in the labor supply queue to encourage older, disabled and welfare recipients to come to work. So far, there have been few signs of such employer-initiated pulling of additional US workers into the labor force--instead, reductions in welfare benefits are pushing more workers into the labor market.

Some of the nation's largest employers of low wage workers--defined as hourly wages below $8.50--roughly the wage used by the federal government to determine eligibility for federal housing, child care and food subsidies--have formed the 26 member Employer Group to better find and keep stable, low-wage workers. About 80 percent of the 600,000 US workers at McDonald's earn about $6 an hour, 80 percent of Marriott International's 185,000 workers earn $8 per hour, half of Hyatt's 40,000 employees earn less than $8.50 an hour. About 90 percent of Levi Strauss's 19,000 US clothing production workers earn about $8 an hour.

About 65 percent of ConAgra Refrigerated Foods' workers earn less than $8.50 per hour, and 60 percent of the 220,000 JC Penney workers earn less than $8.50 per hour.

The companies say market realities make it impossible to raise wages significantly. Member companies include Burger King and Pizza Hut, ConAgra, Marriott and Hyatt Hotels, Aetna Life & Casualty, Levi Strauss & Co, and the US General Services Administration--collectively, the Employer Group employs about 2.5 million US workers.

According to the employer group, worker productivity reaches maximum sustainable levels after three years on the job. To retain workers, these employers are exploring ways to help their employees to find adequate child care, reliable transportation, and affordable housing. ConAgra estimates that it costs the company $2,000 to $3,000 to train a worker to understand health and safety standards and to learn how to properly trim meat off an animal carcass.

To reduce turnover, Group companies share "best-practices" policies, including subsidized child care, specialized training for managers, prenatal care programs and on-the-job immigration and tax-filing advice.

In an effort to increase the demand-pull for unskilled workers, President Clinton proposed legislation in February 1997 that would offer up to $5,000 in tax credits for each newly-hired welfare recipient--50 percent of the first $10,000 in wages paid to persons who had been collecting welfare for 18 months or more--spotlighted large US employers with high worker turnover. Burger King, for example, has 300,000 employees in 7,000 domestic outlets and must hire 300,000 new workers each year to keep fully staffed.

Growth, Inequality and Poverty.

The US GDP is expected to reach $7.9 trillion in 1997, increasing by about $150 billion per month. US exports of goods were about $750 billion in 1995; imports were about $870 billion.

Beginning in 1996, the US changed the way it calculates the inflation adjusted GDP (the market value of goods and services produced in the US), switching from a single-base year to a base of the average of the current and preceding year. As a result, the reported US real growth rate will be lower.

There is more evidence that inequality in lifetime earnings is increasing in the US. In one analogy for understanding economic mobility, the labor market is like a hotel--every room, from the penthouse to the basement, is filled, but occupants change from day to day. Recent data would have the penthouses becoming grandeur, the bottom floors shabbier and the middle rooms about the same.

Treasury Secretary Robert Rubin asserted that "An economy with vast amounts of people of middle income will be a more successful economy over time than an economy with a very large income inequality."

The New York Times on July 25, 1996 carried a review of the relationship between technology and jobs and concluded that labor-saving technology continues to be associated with falling product prices, as in agriculture, but that most of the workers who lose jobs because of technology find new ones fairly quickly. The average duration of unemployment is about 16 weeks or four months, down from a peak 20 weeks in 1982.

Economists and employers emphasize that the workers who are quickest to find new jobs are generally the youngest and best educated.

Unlike technological change in the 19th century, which enabled unskilled workers to replace artisans to make products such as shoes and guns, present day technological change seems to be rewarding people with the ability to build and monitor computers and other machines that actually make products.

A college education has usually been considered one signal that someone has the skills to adapt to a changing labor market successfully, which helped to increase the wage premium that college graduates earned. However, it appears that the wage premium that a college graduate earns over a high school graduate has begun to decline.

The Census estimates that in the 1970s, college graduates with five years or less in the labor market earned 50 percent more than high school graduates with the same experience. The college wage premium dipped to 40 percent in 1979, but began rising in the 1980s, peaked at 80 percent in 1990 and was about 75 percent in 1994.

The declining college wage premium may reflect the increased number of college graduates. Twenty-six percent of 18 to 24-year olds were in college in 1980 compared with 35 percent in 1994.

There are also problems at the top of the labor market. After earning their degrees, many new doctorates subsist on post-doctoral fellowships before securing a permanent job. The National Science Foundation estimated in 1996 that one-third of life scientists and 20 percent of physical scientists, are still in post doctoral students three years after receiving their doctorates.

In 1995, immigrants, who are about nine percent of US residents, were about 30 percent of all scientists and engineers with PhDs engaged in research and development. The US high-tech electronics industry argues that it cannot easily re-employ experienced engineers laid off in aerospace, and thus needs easy access to immigrant engineers.

About 40 percent of US engineers with PhDs are foreign born, promising a debate over whether they are a boon or bane for the US. Many critics contend that universities continue to produce to many engineering PhDs because they want cheap labor to help in university labs; the foreign students, it is contended, are willing to work for lower wages than Americans because employment qualifies them for immigrant status.

The Clinton administration released a report on April 23, 1996 that found that there has been remarkable stability in the US labor market. Many service jobs pay high wages, the report notes, and the number of workers with more than one job has been stable.

The report sorted employment data into 45 occupations and 22 industries, creating 990 industry/occupation cells and found that two-thirds of the net new jobs created in the past two years were in financial and business services that paid $480 per week or more.

As a group, Hispanics--whose roots are traced to at least 20 countries--are characterized by low earnings. One reason for low Hispanic earnings is little schooling--in 1994, 35 percent of Hispanic adults did not finish high school, compared with 16 percent of Blacks and 13 percent of whites.

Chicago economist Kevin Murphy won the Clark Medal in March 1997 for showing that the growth in demand for skilled labor -- not an increase in supply or decline in demand for unskilled labor -- is the principal cause of the widening gap in wages between blue- and white-collar workers.

Immigration and Entrepreunership

In 1995, 12 percent of Inc. magazine's list of the 500 fastest-growing American corporations were founded by immigrants.

The Wall Street Journal reported January 29, 1997 that 75 percent of all Korean-owned businesses in the Los Angeles area employed Hispanic workers. There were about 81,000 Korean businesses and five million Hispanics, in Los Angeles in 1990. By one estimate, 20,000 Koreans in the Los Angeles area came from Latin America and speak Spanish.

By contrast, Korean-Black tensions linger. Some 700 Korean-owned businesses were destroyed in riots in April 1992. Many Koreans say that they have more in common with first- and second-generation Hispanic immigrants than with US-born Blacks.

One African American complaint was that Korean businesses rarely hire local Blacks to work in their shops. Korean business owners say that local Hispanics are more often willing to work for minimum wages than are Blacks.

The Senate Immigration Subcommittee, chaired by Sen. Spencer Abraham (R-MI), held a hearing on April 15, 1997 on "Immigrant Entrepreneurs, Job Creation, and the American Dream."

Filipino doctors coming to the US for advanced training must make a sworn statement promising to return, although the US permits foreign doctors to stay in the US if they provide primary care in areas with shortages of doctors.

Kirstin Downey Grimsley, "26 Firms Seek Ways to Retain Low-Wage Workers," Washington Post, March 21 1997. Stuart Silvestein, "A UNITEd Effort," Los Angeles Times, February 16, 1997. Rhonda Rundle, "Guess shifts apparel-making to Mexico from Los Angeles amid labor charges," Wall Street Journal, January 14, 1997. Matt Crenson, "Disgruntled PhDs find themselves in school of hard knocks," Los Angeles Times, January 12, 1997. Barbara Marsh, "Garment Industry Problems Not Affecting Holiday Sales," Los Angeles Times, December 24, 1996.